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Over 50 life insurance tips

Over 50 life insurance is often called funeral insurance – and for the very good reason that such policies make an ideal way of putting away a little money each month so that it may eventually be used to help pay for your funeral when you die and the insurance policy pays out.

If you are considering the purchase of over 50 life insurance, here are a few tips and suggestions you may wish to keep in mind:

Life insurance

over 50 life insurance is a particular form of what is called whole of life insurance – it is distinguished from term life insurance, for example, by the fact that it pays out a guaranteed cash lump sum whenever you die;

Not a prepaid funeral plan

although the insurance serves very well as a way of saving for your funeral expenses, it is not a prepaid funeral plan;

the cash benefit is paid to your designated beneficiary or beneficiaries, who may be expected to respect your last wishes in applying the settlement sum in paying – at least in part – for your funeral;

it is – as the Money Advice Service explains – an alternative source of funding for your funeral expenses;

Automatic acceptance

unlike some other life insurance products, your acceptance for over 50 life insurance is guaranteed, irrespective of your lifestyle choices or any pre-existing medical conditions – no medical report needs to be prepared or medical questionnaire answered;

Premiums

as an alternative to a prepaid funeral plan, an over 50 life insurance policy has the advantage of potentially much lower monthly premiums than most funeral plans – premiums for some policies start at less than £4 a month;

if the cost of making future provision for your funeral is a concern, therefore, you might choose an over 50 life insurance policy in place of a prepaid funeral plan;

nevertheless, it is important to remember that premiums need to be paid every month for the remainder of your life (or with some policies, until you reach the age of 90) and that if you miss or give up making those payments, the policy is cancelled, with no refund of the monies you have already paid;

Inflation

you may also be aware that – unlike a prepaid funeral plan – this type of funeral insurance is not inflation-proofed;

because of the effects of inflation and the almost certain increase in funeral costs over the years, the death benefit payable may be insufficient to cover the expenses of the type of funeral you might have originally planned – and your surviving relatives need to make up the shortfall;

Over the longer-term

before choosing an over 50 life insurance policy, you might also want to take into account the possibility that, over your lifetime, you may have paid more in total premiums than the value of the death benefit settlement;

if it is likely to be many years before you die, therefore, the more cost-effective way of planning ahead for your funeral is likely to be a prepaid funeral plan rather than this type of life insurance policy.

Over 50 life insurance offers an economical way of saving for your funeral expenses, allowing you to contribute to the costs which are otherwise borne by your family and loved ones.